EDITORIAL - No time for cowardice
This morning at the Bank of Jamaica, the governor, Brian Wynter; Prime Minister Bruce Golding and his finance minister, Audley Shaw, will outline the dirty-fingernail bits of the Government's debt-rescheduling programme, whose broad parameters were unveiled by Mr Golding in his national broadcast last night.
This event is important, marking a potentially decisive turning point for the recovery of the Jamaican economy.
But as this newspaper has warned, this debt-management strategy is not an end in itself. It is not a sufficient fix for the ills facing Jamaica. There are other urgent fiscal demands on the administration, which is why, at today's session, the prime minister and Mr Shaw must not be mere supporting cast to Mr Wynter in enunciating the nuts and bolts of the debt-swap strategy.
They must go to Nethersole Place with a specific programme, and clear timetable - preferably immediate - for further cuts to government spending. If Mr Shaw does not, the minister runs the risk of undermining public confidence, generated by this initiative, that the Government is serious about, and has the ability to deliver, real reform.
We do not, of course, suggest that the Government has done nothing or is not on the right track, despite Mr Shaw's often bumbling, bungling efforts at policy formulation and implementation. Indeed, the imposition of a nearly $22-billion tax package just before Christmas was an important signal of intent to deal with the ballooning fiscal deficit, Mr Shaw's stumble notwithstanding.
Debt servicing consumes more than 60 per cent of the Government's budget and the domestic portion of the obligation appropriates approximately three-quarters of the expenditure. The debt - now nearing 140 per cent of GDP - not only undermines the Government's ability to invest in critical sectors, but keeps the administration in a vicious cycle of borrowing merely to meet debt payments. The crowding out of private-sector borrowers and its negative impact on the economy are all too evident.
Against that backdrop, the estimated $40-billion saving, or around four per cent of GDP, which the Government expects from the redemption and reissuing of $700 billion in domestic debt, is important. The initiative, therefore, is welcome.
The fiscal flexibility that this would allow to the Government must not be abused by the administration to enhance its electoral chances with inappropriate spending. The results would, at best, be ephemeral. The opportunity for a lasting repair of the economy would quickly evaporate.
Therefore, what the administration must also do urgently - which Messrs Golding and Shaw must reinforce today - is to initiate other measures to bring the fiscal accounts quickly into balance, while improving the management and efficiency of the public sector and enhancing its capacity as an enabler of economic growth and development.
This process may require the elimination of some jobs, thus helping to bring the Government's wage bill, currently at $127 billion, closer to the nine per cent of GDP proposed by the International Monetary Fund, rather than over 12 per cent at present. These are tough times, demanding strong action from focused leaders. Indeed, it would be a shame if the administration wastes this grand opportunity provided by the sacrifices of many thousands of Jamaican bond holders.
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